Item record management in NetSuite is one of the most critical process areas you can manage. Not only are items the backbone of inventory and procurement processes, but they have a significant impact on financials. It should therefore come as no surprise when I say that selecting the correct asset account on an item is something you do not want to mess up. But what happens when an incorrect asset account is chosen and you need to update it?
The good news in 2025 is that NetSuite provides a method for updating an item’s asset account that does not require recreation of the item. However, while recreating the item is certainly still an option, one of the impacts of implementing that option is that it can cause divergence in your historical sales reporting for that item. For many businesses who rely on historical sales analysis, this can be a dealbreaker.
Fortunately, NetSuite introduced the ability to apply retrospective account changes (starting in Release 2021.2) through an accounting preference. To be clear, this is not a new feature. My intent here is not to introduce you to a new feature, but rather to provide some considerations to keep in mind before implementing asset account changes on items. By providing you with these considerations, my hope is you will be better prepared to make the transition and will avoid potential disruption to your day-to-day operations and financial reporting.
An item’s asset account can be changed at any point. However, ask yourself these questions before doing so:
- Has the item already been transacted with?
- Is the change retrospective, or prospective?
- In other words, do I have to update transactions that have already been posted to reflect the change in asset account or is this change only necessary going forward? (For historical, think about item receipts, item fulfillments, work order issues.)
- If the change is retrospective, am I willing to reopen prior periods?
- If the change is prospective, what do I need to know?
If you have not transacted with the item, then the change is as simple as updating the item record in NetSuite and selecting the new asset account. On the other hand, if you have already transacted with the item, then you will be wise to heed the following:
- Retrospective (Historical) Change: NetSuite can update historical transactions but unfortunately this is an all-or-nothing approach: you must update ALL transactions from the beginning of the item’s history. Frankly, this is unlikely to be feasible for you if you have extensive transaction history against the item which has undergone multiple period closes.
- However, if you are able and willing to implement the change retrospectively, then it can be executed through a checkbox on the item record named “UPDATE COGS AND ASSET ACCOUNTS ON EXISTING TRANSACTIONS WHEN ACCOUNTS ARE CHANGED.” Toggle this box prior to saving the record, and as always: Test in Sandbox before implementing the change in Production.
- Prospective (Going Forward) Change: NetSuite can also manage the change as a “going forward” change. The catch? NetSuite will not move any existing inventory balances from the old asset account to the new asset account for you. There will be no system generated journal entry or cutover to move the balances. Instead, the change will be manual. Typically, I recommend performing an inventory adjustment as the vehicle to cutover existing inventory from the old asset account to the new.
- Note: Outstanding non-posting transactions like Purchase Orders and Sales Orders will begin posting to the new asset account immediately after you have made the change once their posting transactions (Item Receipts, Item Fulfillments) are created. You should not have to update those transactions, but as always, be sure to evaluate and verify in Sandbox when possible.
In summary, updating an asset account is certainly not an insurmountable challenge. However, it does require thoughtful consideration into the downstream impacts. Particularly those to financials. No matter what path you choose, be sure to thoroughly evaluate the changes in Sandbox prior to updating Production.